Woodford Investment Management  

Woodford: Income Focus will be my last fund

Woodford: Income Focus will be my last fund

Neil Woodford has said his Income Focus fund, set to open to investors next month, will be the third and final of his eponymous firm's products to bear his name as manager. 

Responding to questions over his workload, Mr Woodford said that any further launches by Woodford Investment Management would be run by a different manager.

Investment Adviser revealed last month Mr Woodford would launch the Income Focus fund in March. The portfolio will hold around 50 large and small cap stocks, with only around 15-20 holdings crossing over with the £9.6bn Woodford Equity Income fund.

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There will be almost no crossover with the small-cap focused £765m Patient Capital investment trust.

Woodford Investment Management chief executive Craig Newman said the new fund did not represent an attempt to grab assets by tapping into investors' demand for income, and added that Mr Woodford was capable of running three distinct mandates at once.

“We just wouldn’t do it [otherwise]. We wouldn’t damage what we have been doing in the last three years, there’s just no advantage. If we thought it would stretch Neil we just wouldn’t launch the fund. That’s the reality,” Mr Newman said.

Mr Woodford added: “It’s hard to answer this question without sounding arrogant but what I have demonstrated is reasonable skill-set and running a select a number of portfolios that can do well for investors. I can still do that.

“I have a good team around me, we will probably supplement this with more talent going forward but we have capacity at the moment to do more.”

The new fund – which will have ongoing charges figures of 0.65 to 1.5 per cent depending on the share class – aims to yield 5p on a starting price of £1 in 2018. Mr Woodford said he will then aim to grow the fund’s dividend by low single digits year-on-year. Investors should expect capital growth of between 7-9 per cent, he added.

However, he said capital growth could rise even more significantly over time should his convictions be correct.

“Over the long term there may be scope to enjoy better returns. It seems to me that if we stay in the environment we are currently enduring, which I expect to continue, the ability to accrue a 5 per cent yield from a high quality equity portfolio looks like an anomaly.

“And this has a good chance of being resolved in the future through the [upward] revaluation of equities rather than an inflationary pick up in the economy or a massive increase in bond yields, which is not likely in the foreseeable future. What is more likely is people appreciating the ability to capture income from equity,” he said.

Mr Woodford also said he had become more optimistic about the outlook for equity investors. Last year the manager said it was a difficult environment for UK equity managers, but said he now found himself more bullish than the consensus - a notable change from a manager who typically takes a bearish stance.